Barclays ready to bow to public pressure by cutting bonus levels

BARCLAYS is preparing to cut the proportion of revenues it pays out in staff bonuses to its lowest level in a decade, even though it may well post the biggest profit of 2009 of any of its European peers.

The bank is widely expected to confirm reports it will cut its compensation ratio from 44 to 38 per cent when it unveils its year-end results on Tuesday. The move comes in the wake of efforts by governments around the world to put restraints on pay and bonus packages in the discredited banking sector.

The group is also expected to announce plans to spread the impact of the UK's one-off tax on 2009 bonuses across the global Barclays Capital investment banking workforce. The controversial levy was introduced two months ago and imposes a tax of 50 per cent on any bonus worth more than 25,000.

Barclays declined to comment yesterday on the overhaul of its pay-and-bonus structure, but did refer back to its previous promises to meet the international G20 rules on pay reforms. That code on remuneration practices was published in August and came into force at the start of this year.

Banks have historically paid out compensation ratios of between 45 and 60 per cent, but public outrage over excessive pay in the state-salvaged sector has forced politicians worldwide into tempering the big-bonus culture. Even so, the 22,000 staff at Barclays Capital look to be in line for sharing an estimated 4.5 billion.

Authorities in charge of overseeing the UK's stakes in nationalised banks are said to be keen to review Barlcays' remuneration proposals before it considers those of Royal Bank of Scotland, which is 84 per cent owned by the government.

Analysts expect Barclay to post a profit of between 10.3bn and 11.3bn for 2009, up from 6.08bn the year before.